The Dow Jones Industrial Average recovers its balance on Thursday

• The Dow Jones rallied 200 points on Thursday as investors recovered.
• US data came in generally better than expected, easing recession fears.
• Despite plenty of Fed speakers, almost none addressed monetary policy.

The Dow Jones Industrial Average rebounded about 200 points on Thursday as investors cheered after U.S. economic data eased growing fears of an economic slowdown. A better-than-expected Durable Goods Orders print eased fears that the Federal Reserve (Fed) may have cut interest rates aggressively last week in response to a deteriorating economic outlook. However, investors will continue to watch the monthly jobs report numbers in the coming weeks.

US durable goods orders were flat at 0.0% in August, well below the revised 9.9% from the previous month, but still beating forecasts for a 2.6% decline. Initial jobless claims for the week ended Sept. 20 also beat forecasts, coming in at 218,000 versus the 225,000 expected and down from the previous week’s revised 222,000.

The recent 50 bps rate cut by the Federal Reserve (Fed) has caused some concern in global markets. Some investors are concerned that the big rate cut could be a response to a potential economic slowdown in the US. However, Fed Chairman Jerome Powell said last week that the rate cut was not a hasty reaction to signs of a recession, but rather a proactive measure to support the US labor market.

US durable goods orders and week-on-week initial jobless claims helped bolster the Fed chief’s case, with both numbers coming in better than expected and the “soft landing” economic rhetoric holding steady. However, Friday’s personal consumption expenditure (PCE) inflation print will garner a lot of attention and will be the real test of last week’s Fed interest rate cut.

Dow Jones News

The Dow Jones is leaning firmly on the bullish side Thursday, with more than two-thirds of the stock index firmly planted in the green. Caterpillar ( CAT ) is trading firmly higher on the day, rising 3.3% to near $391 a share, following reports that China unveiled another massive stimulus package aimed at reviving Chinese housing industries and construction, a move expected to benefit Caterpillar.

Dow Jones Price Forecast

Despite Thursday’s upbeat tilt, the Dow Jones is struggling to make headway after its midweek retreat. Still, price action is within reach of recent all-time highs, and bidders will have their eyes on the next step.

Dow Jones buyers stubbornly staked their claim on the 42,000 handle, shrugging off signs of overbought conditions. On the downside, sellers will look to pull the stock chart back down towards the 50-day exponential moving average (EMA) near 40,870.

Dow Jones Daily Chart